THERE is high demand for a three-and-a-half year US$25 million African Development Bank (AfDB) finance facility to Zimbabwe’s private sector as the country grapples with an acute shortage of foreign currency, businessdigest has leant.
CABS MD Simon Hammond this week said high demand generated by the growth of the small and medium enterprise (SME) sector has also played a part in pushing up appetite for the facility.
The uptake of the facility, which was secured in March this year, has already breached the 50% drawdown mark and is expected to be exhausted before year end, he said.
“We have accessed the facility and we are now working with eligible customers for disbursal of the funds. Based on the current rate of uptake, the facility is likely to be exhausted before end of the year. In this regard, CABS continues to prospect for additional lines of credit that can be put to productive use. Demand is high with 50% of the facility already taken up. This is driven by a shortage of foreign currency and high demand to increase export capacity and growth of the SME sector,” he said.
He said the loan facility is earmarked for clients in productive, export-oriented and SME sectors of the economy.
He added that there were positive prospects for the bank’s loan book which sat at above US$800 million as at June 2018.
“The risk-based approach entails that loans are structured and managed in line with the customer risk profile. This has greatly assisted in ensuring new loans do not migrate to non-performing loans, whilst non-performing loans stand a better chance to be rehabilitated to the performing book. We intend to continue managing our NPL ratio downwards. As at June 2018, our loan book was above $800 million and prospects are positive. As leading providers of credit to the market, we anticipate further growth as we support the productive sectors of the economy,” he said.
Zimbabwean banks have been facing challenges in sourcing lines of credit.
The facility is expected to help small to medium enterprise players improve on their working capital, address liquidity constraints, cover the growing gap in foreign currency needs as well as import much-needed raw materials.